AUSTRAC Chief Executive Brendan Thomas says luxury goods, along with cash and real estate, are “highly effective” for laundering money.
Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast site, my own website, the Apple Podcast store or wherever you go to get your podcasts. Or you can get it at the Business Acumen website at www.businessacumen.biz or at Banking Day.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com.
I am Leon Gettler. My job is to review and monitor the week’s news in business, finance and economics. I bring it all to you, every week.
This is episode number 24 in our series for 2024 and today’s date is Friday July 12.
First, I’ll be talking to I’ll be talking to Leslie Chong, the CEO/MD of Imugene and has been instrumental in building it from a new company with one technology to a leader in Australian biotech, with five different clinical trials underway targeting a multitude of cancer types.
And I will talk to economist Saul Eslake about how Australia will be fairing with the latest inflation figures
But first, let’s talk to Leslie Chong.
So what’s happening in the news.
France is on track for a hung parliament in Sunday’s election, with a leftist alliance of the New Popular Front unexpectedly taking the top spot ahead of the far right, in a major upset that was set to prevent Marine Le Pen’s National Rally (RN) from running the government. The New Popular Front’s members include France Unbowed (LFI), led by the radical-left firebrand Jean-Luc Mélenchon. Founded in 2016, LFI is radical left and populist, believing that traditional parties and political organisations no longer serve democracy. Second comes the Socialist party (PS), the mainstream centre-left party of François Mitterrand and François Hollande. Social democratic and pro-European, it was for decades the largest party of the French left, but scored less than 2% in the 2022 presidential election. The French Green party (LE-EELV) is the latest iteration of a movement founded in 1984. It has had two spells in government, joining a leftwing alliance with the PS and Communists in 1997, when its then leader, Dominique Voynet, was environment minister, and another in 2012 under Hollande’s Socialist presidency. The French Communist party (PCF), one of Europe’s oldest, was long the main force on the postwar French left and also served in Lionel Jospin’s PS-led government from 1997 to 2002. It still aims to “overcome” capitalism, but is pragmatic about doing it. The outcome, if confirmed, will leave parliament divided in three big groups with hugely different platforms and no tradition of working together. The RN was set to come third, according to pollsters’ projections based on early results. “It looks like the anti-far right parties really got a lot of support, said Simon Harvey, head of FX analysis and Monex Europe in London. “But fundamentally from a market perspective, there’s no difference in terms of the outcome. There’s really going to be a vacuum when it comes to France’s legislative ability. The bond market is going to be the real place to look at. There might be a bit of a gap lower in French bonds.” “While the initial French election results still raise many questions, financial markets are likely to greet the vote with some relief. The results appear to show that the more moderate forces still ally in the second round against more extreme candidates, which also has repercussions for the next presidential election,” said Jan Von Gerich, chief market analyst at Nordea in Helsinki. “That said, the economic programme of the left is in many ways much more problematic than that of the right, and while the left will not be able to govern on their own, the outlook for French public finances deteriorates further with these results. It is thus reasonable to expect somewhat higher risk premia in French assets to prevail also beyond the initial market reaction.” And, now, France’s answer to the UK’s Jeremy Corbyn, Jean-Luc Melenchon is already arguing that he should be in charge of, well, everything. Macron may already be wondering if it would have been easier to do a deal with Le Pen, someone who at least seems to grasp that market opinions matter, as opposed to someone who is actively hostile to markets. What’s French for “be careful what you wish for”?
Australia has some of the worst real wage growth of the OECD’s 38 member nations, lagging behind the United Kingdom, United States and Canada, exposing the federal government’s struggle to deliver on its election commitment to get real wages moving as inflation remains high. The latest employment outlook from the Organisation for Economic Co-operation and Development found real wages in Australia remained 4.8% below pre-pandemic levels. Australia was one of 16 member countries whose real incomes have gone backwards since the end of 2019. It fell well below the OECD average of 3.5% real wage growth over the same period. The OECD also found that while the minimum wage was 22.7% higher in dollar terms than in May 2019, when accounting for inflation it had grown by only 2.3% over the same period – trailing the results in most OECD countries.
Customers have been prevented from placing orders with Booktopia-operated websites after administrators axed 165 jobs at the embattled bookseller where dozens of interested parties are circling the carcass that remains of the business. Only 18 employees remain at Booktopia after administrators from McGrathNicol, appointed in early June, assessed that the funds available to the business were insufficient to keep most jobs. Expressions of interest in Booktopia’s assets closed on Monday, with an administrator confirming about 60 parties had thrown their hat in the ring for the entire business or parts of it, such as its automated fulfilment centres. Rival book chain Dymocks chief executive Mark Newman previously said it “would be silly not to have a look and see if there’s anything there that might be useful to us”. Administrators generally prioritise offers that allow the business to be sold as a going concern, but ultimately will assess what the best option is for returning the highest value to creditors. Customers who try to buy items from websites owned by Booktopia, which also owns the Angus and Robertson website and publisherservices.com.au, will be greeted by a banner message stating “Payment gateway under maintenance, try again later” at the checkout page with no option to complete the purchase. The 60-odd parties that have expressed interest will be asked to sign a non-disclosure agreement that provides access to information about Booktopia’s finances, and then interested parties will be asked to submit their non-binding indicative offers. Administrators will work through those and shortlist the best offers to proceed to the next stage of the process, where parties will be asked to submit final binding offers before the end of the month.
Criminals using diamond studded watches, designer handbags, and high-end jewellery to launder their ill-gotten gains have been flagged as a “very high” risk by the financial crimes watchdog. AUSTRAC chief executive Brendan Thomas has revealed luxury goods, along with cash and real estate, had received the highest risk rating from authorities because they were “highly effective” for laundering money. Mr Thomas also revealed AUSTRAC was looking into social media platform TikTok, over concerns its in-app payment platform was vulnerable to abuse. TikTok operates a payments system that lets users give “gifts” in the form of digital gold to people streaming on the site that can be redeemed for real money. The system has become popular among the site’s younger user base. But in 2022, a Turkish government news site reported that local authorities had found millions of dollars were being transferred via TikTok to accounts suspected to be linked to terrorist groups. Mr Thomas said preliminary investigations showed TikTok was not covered under Australian anti-money laundering laws because it operated out of Singapore, but its payment platform PayPal was. The AUSTRAC boss said he had written to his sister agency in Singapore to open discussions about how TikTok’s operations in Australia could be given proper scrutiny, adding that social media was an area of serious concern.
NDIS Minister Bill Shorten said payments for sex work will be banned under changes to the scheme, conceding a wide range of services being billed to taxpayers are unsustainable. Mr Shorten slammed the opposition and the Greens for dragging out passage of legislation to overhaul exploding costs, saying another round of parliamentary hearings will slug the budget by $1.1 billion – the equivalent of paid packages for as many as 60,000 children. “We want to issue regulations which can’t get rolled … which say you don’t get to spend your money, and I kid you not, on cryptocurrency or steam rooms, or in one case people trying to organise 20 people to go to Japan. It’s not on.” Asked if payments for sex work would be banned, Mr Shorten said such a move was necessary, even if cases were isolated. “We will rule it out. That’s just not a sustainable proposition,” he said. “The rules have been a bit loose at the margins, let’s just tell the truth.” But the Coalition on Sunday said it would not be bullied into supporting changes proposed by the federal government, insisting a further Senate inquiry was necessary to stop the scheme’s cost outstripping Medicare, aged care and the pension. The $42 billion program is already on track to overtake the age pension within three years as the most expensive area of government spending. Labor’s attempts to cut the annual growth rate to 8% are being held up by Coalition and Greens plans for another inquiry. Just a decade old, the NDIS already costs more to run per year than the aged care system ($36 billion), Medicare ($32 billion), federal government funding for hospitals ($30 billion) and the pharmaceutical benefits scheme ($20 billion). Labor’s changes would enact key recommendations from last year’s NDIS review. About $14.4 billion would be saved, including an end to automatic top-ups, when a participant uses all their allocated funds. The budget estimates that state and federal government NDIS spending will reach $60.8 billion by 2027-28. The Parliamentary Budget Office’s online budget tool shows the watchdog’s baseline expectation is the NDIS to overtake the age pension in 2034-35, when both programs are expected to cost about $100 billion a to operate. The legislation was referred to a Senate committee in March, with a final report released in June. But the Coalition and the Greens sent the legislation back to a Senate committee for another round of scrutiny, due to continue until August. Mr Shorten said the delay was unnecessary.
Investment chiefs from the country’s biggest superannuation funds will not bankroll Opposition Leader Peter Dutton’s nuclear power plan, despite strong appetite for other energy transition assets and a shortage of domestic investment opportunities. Super CIO Damian Graham said the production timelines on nuclear were too long to help meet the fund’s own net-zero targets. For Mr Graham, nuclear did not meet the “near time” emissions reduction strategies Aware needed to invest in to meet its energy transition targets. These include a 45% reduction in scope one and two emissions in its portfolio and net zero by 2050. “We’re working towards that, and that doesn’t involve investing in nuclear,” Mr Graham said. “It’s a long-term build, no doubt about it, and we need to be making really clear progress by 2030.” He pointed to renewables and other transition-supporting technologies as attractive investment opportunities for the $170 billion super fund instead. Mr Dutton pledged two nuclear power plants would be operational by 2035 under his plan and more potentially by 2037 if he was elected next year, despite the CSIRO estimating the first full operation of a station could be “no sooner” than 2040. Graham’s counterpart at UniSuper, John Pearce, said nuclear investments would not make money for members fast enough, while Cbus ruled it out completely. The investment bosses of half a dozen funds also agreed there was not enough policy certainty to justify any serious consideration of nuclear energy investments. Broader appetite for private investment in nuclear has been low, with Mr Dutton conceding his scheme will need to be publicly funded despite the Liberal Party’s historic dislike of state-owned energy. Funds’ dismissal of nuclear also comes as they pour billions of dollars into renewables, and Treasurer Jim Chalmers calls on the $3.6 trillion sector to deploy some of its ever-growing asset pool into “nation building” are like the energy transition. “The main reason [we won’t] is the payback time is way too long for us – we’re talking decades, not just years,” Mr Pearce said on possible investments in nuclear. “We know that nuclear is proven, scalable technology, and you’ve got your ESG considerations as well as economic, but from that economic side, it just doesn’t stack up [as an investment] for a super fund for us.” Cbus’ CIO Brett Chatfield said: “We don’t see nuclear as a part of the energy transition going forward.” Cbus, which is chaired by former Labor treasurer Wayne Swan, has been the biggest backer of “nation building” projects to date, including as the only super fund to invest in the government’s controversial Housing Australia Future Fund. But Mr Chatfield said the fund was “much more focused on the renewable area, particularly onshore and offshore wind and solar” when it came to supporting the energy transition. Other Chief Investment Officers said proposed policies to introduce nuclear power in Australia were too vague to justify considering investment.
Network Ten’s future is uncertain with Paramount Global, the troubled Hollywood conglomerate that owns a diverse array of businesses including Network Ten, Paramount+, Paramount Studios, CBS, MTV, Nickelodeon, and Channel 5 in the UK, agreeing to a significant merger with film production studio Skydance Pictures. The deal, finalised today, sees the billionaire Ellison family acquire the controlling stake in Paramount from the Redstone family. The $US4.75 billion merger, resulting in Network Ten—often considered a secondary asset for the American company—falling under the ownership of the Ellisons. Larry Ellison, the patriarch who amassed his wealth through Oracle, a $US400 billion software giant listed on the NYSE, and his son David Ellison, the founder of Skydance responsible for hits like Top Gun and Terminator, are at the helm of this strategic move. The future direction for Network Ten under the Ellison family remains uncertain. In a press release announcing the transaction, Skydance indicated plans to bolster Paramount’s platforms through enhanced technology and infrastructure. The statement also mentioned improvements to Paramount’s traditional television networks, although it did not specifically name Network Ten.
In new revelations, outgoing Senator Linda Reynolds who needs the money to back up the millions in her parliamentary super – your taxes at work – makes a last minute claim in her lawsuit against Brittany Higgins that Anthony Albanese’s closest confidantes, Katy Gallagher and Penny Wong, were drip-fed false information by David Sharaz and Brittany Higgins as part of a larger plan to destroy the career of Reynolds and take down the Morrison government. The explosive court documents allege Mr Sharaz also organised meetings between Ms Higgins and Labor members of parliament to discuss her rape allegations, the documents say, including then opposition leader Mr Albanese and Tanya Plibersek, as well as former Liberal prime minister Malcolm Turnbull and former Labor prime minister Kevin Rudd. The extraordinary claims form part of Senator Reynolds case against Ms Higgins in the Western Australian Supreme Court, where she is suing her former employee over a series of social media posts she says defamed her. Senator Reynolds claims the Instagram, Twitter and Threads posts and mishandled the allegations of rape against former Liberal staffer Bruce Lehrmann by failing to provide her with any support. The case is set down for trial on August 2, following multiple failed mediation talks.
And that’s it for this week. And next week, I’ll be talking to Alex Perry, the managing director of investment company Sharewise. Alex has a strong history of working in the Investment Management industry. We will talk about how geopolitical conflicts in the Ukraine and Gaza are affecting markets. And we’ll talk about the market impact of US presidential election in November.
And I will talk to RMIT economist Sinclair Davidson about whether this downturn is worse than the GFC.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com.
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Wishing you all a safe and healthy week. And looking forward to bringing you Talking Business next week
